Insights #6: Close to the Edge? How many firms around the world are in or close to corporate distress? And how do our results differ from others?

As interest rates rose in many economies, fears of a “hard landing” grew. But has tighter monetary policy translated into more firms going into corporate distress? The Crux of Capitalism project tracks three indicators of corporate performance and is well placed to assess how many firms are close to the edge. In 2021 and 2022 already 25% of firms struggled to make their interest payments, 8% showed elevated risk of bankruptcy, and 28% were destroying economic value. Australian and Canadian firms appear to be especially vulnerable, while fewer Japanese and Swiss counterparts are in danger.

14 Sep 2023 · Magaly Abboud, Fabio Bernasconi, Sára Czégé, Camilla Erencin, Simon J. Evenett, Alexander Gruber and Felix Reitz